AI-assisted research analysis by FutureKnowledge. Sources checked 22 October 2026. This is not investment advice.
Reviewed by FutureKnowledge: figures, dates and attributions were checked against the linked sources before publication.
China’s CSI 300 index slipped into bear-market territory on Thursday, 22 October, falling more than 20% from its June peak after ten straight weekly losses. It is the benchmark’s first bear market since the 2020 Covid sell-off.
What happened to the CSI 300 on Thursday
The CSI 300, which tracks the 300 largest companies listed in Shanghai and Shenzhen, fell more than 1% during the session and crossed the 20% line intraday, Investing.com reported, citing LSEG data. It was down 2.6% for the week, its tenth weekly decline in a row. A BeInCrypto report republished by Yahoo Finance put the index at 4,060.19 at the morning break, about 20% below its peak, and 13.94% lower than at the start of the year. Dimsum Daily dated the peak to the 22 June closing high.
Reports differ on timing, which matters for the formal definition. Reuters, in a story carried by Business Recorder, said the index was down 1.3% at the midday break and “nearly 20%” below its peak. A bear market is usually confirmed on a closing basis, so Thursday’s close is the figure to check.
The damage was sharper in technology. Investing.com listed falls of 9.4% in Z.AI, 6.9% in MiniMax, 6.7% in NetEase and 6.1% each in Alibaba and chipmaker SMIC. The STAR 50 index is down nearly 40% over the half-year and ChiNext 36%. In Hong Kong, Reuters said the Hang Seng fell 2.9% to a four-month low and tech shares lost 4.6%, while Dimsum Daily reported the Hang Seng Tech index at its lowest intraday level since September 2024.
Why Chinese stocks entered a bear market
Global doubts about AI returns
The most immediate trigger is the wider retreat from AI-linked shares. Investors are asking whether heavy spending on AI infrastructure will earn enough to justify current valuations. The debate sharpened this week as Meta lifted its 2026 capital spending range, as covered in our analysis of Meta’s Q3 results. China’s market had piled into the same theme: Qianchuang Capital’s Leo Wang told Reuters that heavy tech allocation in the first half of 2026 had created a bubble in some sectors.
The selling was regional. South Korea’s Kospi fell 2.56% by midday and Japan’s Nikkei 225 1.65%, according to the Yahoo-republished report. On Tuesday, Investing.com reported a slide in Korean chipmakers led by SK Hynix.
Strong GDP, fading stimulus hopes
Paradoxically, better data has hurt. The National Bureau of Statistics reported on 19 October that GDP grew 4.5% year on year in the third quarter and 4.6% in the first nine months. That beat the 4.41% consensus cited by the South China Morning Post and sits within the 4.5% to 5% annual target. As we noted in our report on China’s third-quarter growth, exports did the lifting. The same release shows retail sales up just 1.1% in the first three quarters and property development investment down 20.6%.
Investors read the beat as reducing the need for stimulus. Benchmark lending rates were left unchanged on 20 October for a 17th month, with the one-year loan prime rate at 3.0% and the five-year at 3.5%. Reuters said investors were let down by Beijing’s piecemeal measures, such as mortgage interest subsidies for first-time buyers of lower-priced homes.
A tax deadline for the wealthy
A less visible factor is tax. A rule introduced in late July requires residents to declare offshore trust income, taxed at 20%, and Thursday, 22 October, was the filing deadline. A Reuters analysis published by The Standard on 16 October described wealthy families selling assets to raise cash, including one family office selling about half its equity portfolio. Bank of East Asia’s Bosco Wu told Dimsum Daily the deadline had added to pessimism.
Weak earnings and squeezed margins
Underneath sit excess capacity, weak consumption, a long property slump and price wars that squeeze margins even in EV batteries, as CATL’s latest quarter showed in our CATL Q3 results analysis.
How the China sell-off could affect India and businesses
Indian shares fell alongside the region. By 10:59 am IST the Sensex was down 678.90 points, or 0.92%, at 73,030.79 and the Nifty down 1.10% at 22,568.10, ETV Bharat reported, with power and metal stocks the biggest drags. These are intraday figures.
There are two channels to watch. The first is relative valuation: a cheaper China can compete with India for emerging-market allocations, at a time when foreign investors have already pulled record sums from Indian equities this year, as we covered in our report on foreign investor outflows. Gulf sovereign funds have been buying Chinese assets, with $14.2 billion invested in mainland China and Hong Kong through September, per Global SWF data cited in the Yahoo-republished report. The second is trade: weak Chinese demand at home tends to push more surplus goods into export markets, a concern for Indian steel and chemical makers.
Who is more or less exposed
- More exposed: global and regional AI hardware suppliers, investors concentrated in Chinese tech and Hong Kong listings, commodity producers that rely on Chinese demand, and Indian manufacturers competing with low-priced Chinese exports.
- Less exposed: domestically focused businesses with little China trade, and companies that import Chinese inputs, which may benefit if surplus pushes prices lower.
Scenarios to watch
The table below sets out conditional scenarios, not predictions.
| If… | Then a plausible effect is… | Signal to watch |
|---|---|---|
| State-backed funds step up buying | The decline could slow, though Bloomberg Intelligence has said state buying alone may not deliver a lasting recovery | ETF inflows; statements from Central Huijin |
| Beijing announces larger consumption or property support | Stimulus hopes could revive, especially in consumer and property shares | State Council and PBOC announcements |
| Global AI stocks keep falling | Pressure on Chinese, Korean and Taiwanese tech could persist | US megacap earnings and chip stocks |
| Tax-related selling fades after the deadline | One source of supply could ease | Insider and major-shareholder sale filings |
What to watch next
- Thursday’s CSI 300 close, to confirm whether the bear-market threshold held on a closing basis.
- Any policy signals after key meetings; Capital Securities’ Lin Jinghua told Dimsum Daily the market needs a clearer stabilisation signal.
- October activity data from the National Bureau of Statistics, due in mid-November.
Bottom line
The CSI 300 bear market reflects several pressures at once: a global reassessment of AI valuations, a strong GDP print that lowered hopes of stimulus, tax-driven selling by wealthy holders and thin corporate margins. Shaun Rein of China Market Research Group called it “a crisis of confidence”, according to The Economic Times. A turn likely depends on policy and the AI trade more than on headline growth.
Method note
We compared reports from Investing.com, Reuters (via Business Recorder and The Standard), Dimsum Daily, The Economic Times (via inkl), BeInCrypto (via Yahoo Finance), the South China Morning Post and ETV Bharat, with primary data from China’s National Bureau of Statistics. Index figures were taken at different times; closing levels were not yet available.